How Much Tax Will I Owe Self Employed?

Are you trying to calculate your latest tax return and wondering how much tax will I owe self employed?

Many Americans cross their fingers at tax time, hoping for a big tax refund from the US government.

In the very least, they would like to break even and feel confident that their tax is all sorted for the year.

To really answer how much tax will I owe self employed you need to calculate your income and any allowed expenses for the year.  There is not one general answer.

How Much Tax Will I Owe Self Employed – Why Do You Owe Taxes?

The vast majority of tax filers, more than 70 percent do get money back from the government, with the average payback close to $3, 000, in accordance with the IRS.

This is a lot of money, would you agree?

But every year, some other taxpayers get a nasty surprise: They owe Uncle Sam hundreds or thousands of dollars that they didn’t plan or budget for.

How can that be?

To put it simply, if you owe a large sum in taxes, it’s likely because you kept too much of the paycheck throughout the year and had too little withheld automatically.

Any time you have a major life change such as getting married, having a child, retiring or starting a new job, you should re-evaluate your tax situation and update your withholding, says Jackie Perlman, principal tax research analyst at The Tax Institute at H&R Block.

The 3 changes below could cause an unexpected tax hit.

Check this out because it can help you with the questions about how much tax will I owe self employed.

1) Increasing income

Think about the answers to these questions:

• Did you go from being on one income family to a dual income family?
• Did one spouse get a promotion, large raise or bonus?
• In case your household income increased, but you didn’t take any additional deductions or exemptions versus the prior year, that might make your tax withholding too low, says Lisa Lewis, CPA and TurboTax expert.

2) Fluctuating income

Similarly, if your income fluctuates during the year either because you are self employed, or based on investment income, perhaps you didn’t realize exactly how much income you’ve got coming in and didn’t withhold enough.

Which means you might not need to adjust your withholding.

Taking the Right Steps Now

The Internal revenue service along with other tax professionals offer an on-line W-4 withholding tax to help determine your appropriate strategy.

Once you know that, request a Form W-4 from your employer to adjust your withholdings.

Self employed workers who make quarterly estimated payments to the Internal revenue service use Form 104ES.

Finally, retirees need to complete Form W-4P for pensions and annuities, Form W-4V for Social Security and railroad pension or Form W-4 for military retirement.

Speak to a tax professional if you’d like to get a detailed tax calculation and figures to answer, ‘how much tax will I owe self employed?’